Centre blinks, TN set to join Uday Scheme by year-end

The Union government agrees to State’s demand on quarterly tariff revision and on period of bonds by Tangedco for loan repayment

CHENNAI: With the Centre agreeing to the key demands of Tamil Nadu government for joining the Ujjwal Discom Assurance Yojana (UDAY) Scheme, the State is all set to join it within a couple of months.  
The consensus was reached after Electricity Minister  P Thangamani and TANGEDCO/TNEB Chairman and Managing Director M Saikumar held detailed talks with Union Power Minister, Piyush Goyal, at New Delhi on Friday.

“The Union Power Ministry has agreed to the key demands of Tamil Nadu government – no quarterly tariff revision and the bonds to be issued by TANGEDCO for repaying loans will be for 15 years with five-year moratorium. Further, exemption from Fiscal Responsibility and Budgetary Management (FRBM) norms for the bonds have been allowed for two years,” official sources said.  
Asked when Tamil Nadu would be joining UDAY, the sources said,  “Comprehensive discussions took place on various issues on UDAY today. The State government will take a final decision soon. Mostly likely, Tamil Nadu will join by December.”

UDAY Scheme had been launched by Union Power Ministry for financial restructuring of debts of power distribution companies. At present, TANGEDCO’s total loan portfolio is Rs 81,782 crore as on September 30, 2015. This includes loan from Tamil Nadu government (Rs 6,223 crore), Generation project loans (Rs 32,019 crore) and loans relating to distribution segment (Rs 43,540 crore).  
While the Tamil Nadu government is considering taking over Rs 32,660 crore (75 per cent of Rs 43,540 crore),  TANGEDCO would also issue bonds for Rs 10,880 crore to discharge residual distribution segment loans borrowed from financial institutions and banks. Discussions on UDAY scheme had been going on for more than a year and Chief Minister J Jayalalithaa had opposed many of its conditions, particularly the directive to revise electricity tariff once in three months to offset fuel price changes.  But after the Union Power Minister met the Chief Minister on July 15, some headway was made in the talks on UDAY. Later, during the past three months, a few more interactions between  Tamil Nadu officials and the Union Power Ministry led to the agreement on Friday.

So far, 16 states and the Union Territory of Puducherry have joined the UDAY scheme. Maharashtra, Telangana, Assam and Kerala had already given ‘in principle’ approval and are likely to join soon.
Jayalalithaa had already demanded that the Centre should provide 25 per cent grant similar to the assistance provided in Financial Restructuring Package programme implemented in 2012. She also said that commercial banks should provide 50 per cent cash loss financing for the next five years as some cash losses of DISCOMs would persist during the initial period. Pointing out that the Aggregate Technical and Commercial Losses (AT&C) of TANGEDCO were around 24.95 per cent in 2010-11 and steps had been taken to reduce the AT&C losses to below 15 per cent, Tamil Nadu team said currently, T & D losses were 16.02 per cent (AT & C losses 20.91 per cent).
Recalling that the process of establishing the inter-State Green Energy Corridor should be expedited to enable Tamil Nadu to transmit renewable power to other states which are in need of such power, the Tamil Nadu government said the Rs 150 crore invested for installation of capacitor banks and reactors for compensation/consumption of the reactive power, should be given as grant.

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